Maximization of Social Welfare Conventional

The problem is the basic economic welfare to find a function of social welfare maximum theoretically, subject to various constraints, such as the status of technology in production, natural resources that are available, national infrastructure, and obstacles such as behavior Maximization value to consumers and producers benefit Maximization. In the economic possibilities of the most simple this can be done to solve the simultaneous equation seven. Economic equality in this simple example has only two consumer (consumer 1 and consumer 2), only two products (product X and product Y), and only two factors of production, namely labor (L) and capital (K)). The model can be stated as follows:
Maximize social welfare: W = F (U1 U2) subject to the constraints: K = Kx + Ky (Total capital used for the production of goods
X and Y)
L = LX Ly + (Total labor used in the production of goods X and Y)
X = X (Kx LX) (production function for product X)
Y = Y (Ky Ly) (production function for product Y)
U1 = U1 (X1 Y1) (Preferences (option) from the consumer 1)
U2 = U2 (X2 Y2) (Preferences from the consumer 2)


These solutions use the Pareto Optimum. Examples are the realistic use millions of consumers, millions of products and some of the factors of production, but the similarities matematiknya very complex. Also, find a solution to an abstract function that does not directly produce a policy recommendation. In other words, equality is not a breakthrough in solving social problems. Nevertheless, a model such as that mentioned above can be seen as an argument that solve a social problem (such as the achievement of pareto optimal distribution of wealth) is the most can not be possible in theory.
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